Cisco Acquires IP Speakerphone Maker SignalWorks

Continuing its practice of acquiring firms whose technology plays a key roles in its products, Cisco Systems Inc. has acquired SignalWorks Inc., makers of echo cancellation technology that is already widely deployed in Cisco IP phones to enable speakerphone functionality.

The all-stock deal is an exchange of Cisco common stock, worth approximately $13.5 million, for all outstanding shares and options of SignalWorks. The acquisition is expected to close by the fourth quarter of Cisco's fiscal year 2003 and has been approved by both board of directors.

The SignalWorks software supports a very specific function, full-duplex speakerphone operation for IP phones. However, SignalWorks brings broad experience in speech processing, codecs (G.711, G.722, G.723, G.728, and G.729), call control (H.320, H.323), microphones, loudspeakers, acoustics and telephone enclosure design. The company's products work with media processing chips by TI, LSI Logic, and Hitachi.

The SignalWorks speakerphone technology uses an adaptive acoustic echo cancellation algorithm, also known as an acoustic echo canceller (AEC). According to the company's description, "This algorithm makes a mathematical model of the echo that is caused by the loudspeaker sound that is detected at the microphone. By estimating the echo precisely it is possible to subtract the echo estimate from the microphone signal, leaving only the desired signal of the near-end' talker."

Cisco also announced a stock deal valued at about $500 million to acquire privately held The Linksys Group Inc. and to assume all outstanding employee stock options. Linksys is one of the leading makers of consumer and small-office routers. The move complements Cisco's ATA 168 product, in interface box between a phone and an Ethernet network, for consumer IP voice-over-broadband services. It is conceivable that the ATA technology could be incorporated in consumer routers.

Cisco further announced an additional stock buyback that will total as much as $5 billion. The company earlier announced a buyback plan for as much as $8 million. Profitable despite the downturn in the telecom industry, posting a net income of $991 million for the fiscal second quarter ended Jan. 25, 2003, Cisco has significant cash resources that enable the stock repurchases.